SportPesa Shareholders Feud Intensify

The battle for controlling sports betting giant SportPesa between its billionaire shareholders has taken a new turn. In a letter to the Betting Control and Licensing Board (BCLB), former chairman Paul Wanderi Ndung’u has accused Chief Executive Ronald Karuari of grabbing the company and tax evasion.

SportPesa, which anticipates a comeback into the Kenya market, is locked in a sad ownership and tax row with the Kenya Revenue Authority (KRA). In the letter to BCLB, Ndung’u claims Karauri and current SportPesa Chairman Francis Kiarie have registered a new betting firm in a scheme to defraud other local shareholders and deny KRA taxes running into billions of shillings. Ndung’u further alleges that the decision to approve a new betting outfit, Milestone Gaming Ltd, would leave other local shareholders with a raw deal. Simultaneously, Milestone Gaming was registered on October 4 to run a betting business, with Karauri and Kiarie holding a stake.

“This is meant to deprive the Kenyan shareholders of their long-term investment in Pevans East Africa Ltd by Milestone taking over and stripping off the assets of PEAL,”

– accused Ndung’u writing to BCLB CEO Peter Mbugi.

The registration of the new brand Ndung’u added, was also meant to undermine a tax settlement agreement that Pevans East Africa had reached with KRA in August 2019. Pevans, through Karauri, had promised to pay Sh15.1 billion in 18 equal monthly installments. Ndungu’u further questioned why BCLB allowed the CEO and Kiarie to own 95 percent of Milestone Games despite ongoing investigation on tax evasion and money laundering against SportPesa. Some of Ndung’u’s accusations have seen Pevans move to court, claiming the former shareholder had been sued on behalf of claims of fabricating statements and other falsehoods. Though SportPesa has maintained that its tax liability ended after KRA lost a case in court, noting that the taxman had wrongfully taxed a gamer’s stake instead of only winnings.

Ronald Karauri

“The tax evasion issue is neither here nor there,” said the brand spokesperson Lola Okulo. Some of the claims Ndung’u repeated in his letter to BCLB around the transfer of funds, partnership and audits have attracted the lawsuit. The company claims the Ndung’u statement released on November 1 ruined its reputation as a betting firm and a sponsor of top international football clubs and sporting events. Pevans argued that the former chairman was in a privileged position where he could access information or clarification on dealings. The firm further argued that the former chairman was at the brand’s helm when the issues he has raised were dealt with.

The investigation into Pevans dealings had also roped in two Bulgarian shareholders who have since been deported, said Ndung’u. On November 1, Karauri announced that the giant betting company had made a comeback after closing shop last year and would resume operations under a new BCLB license.

“As SportPesa plans to return to the market armed with a court order, SportPesa is back! I’m happy to announce that the SportPesa brand is back under a new BCLB license holder,” – said Karauri at the time.

The Ceo said the betting firm would promote responsible gaming. Under the agreement to pay up its tax obligations, Pevans would pay KRA Sh830 million monthly installments, putting it back into the government’s good books. Being a different company is highly unlikely that the Milestone can take up the tax obligations of the brand they have adopted. In a letter to the former Commissioner of Domestic Taxes Elizabeth Meyo on September 15, Karauri confirmed that Pevans would pay Sh838 million on or before each month’s 20th day.

“We confirm that we are willing to pay the said sum of Sh15.1 billion on the terms and understanding set out in our letter of August 27, 2019. As you are aware, we are currently not in business, and therefore, it would be difficult for us to commence making payment in September 2019.” – Karauri said

He proposed that the payment began from October when they had hoped to be back in business. However, by October 10, 2019, the company had yet to resume operations. Karauri wrote ago to KRA, alerting to pay following a delay in issuing an operating license from BCLB.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.